from the not-the-droids-you're-looking-for dept

Back in 2011, Verizon and AT&T eliminated unlimited wireless data plans, instead pushing users toward share data allotments and overage fees as high as $15 per gigabyte. And while the companies did "grandfather" many of these unlimited users at the time, both companies have made at art form out of harassing or otherwise annoying these customers until they convert to costlier shared plans. And despite the fact that such overage-fee-based plans confuse the living hell out of most customers (who have no idea what a gigabyte is), both companies continue to insist that customers don't actually want unlimited data.

Speaking at an investor conference last week, Verizon CFO Fram Shammo once again declared that Verizon knows what consumers want, and it isn't unlimited data:

"At the end of the day, people don't need unlimited plans," Verizon Chief Financial Officer Fran Shammo said at an investor conference Thursday."

And despite the fact that plenty of companies (like T-Mobile) have seen explosive growth of late selling unlimited data plans, Shammo proclaimed making money off of unlimited just isn't possible:

"T-Mobile and Sprint have introduced cheaper unlimited data plans -- in exchange for slowing the connection for lower-resolution video -- and AT&T has been trumpeting its own unlimited data bundle with DirecTV video service. The push to unlimited data marks a reversal of the last few years of rhetoric about the costs of delivering service. For Verizon, that remains the biggest argument against unlimited. "You cannot make money on an unlimited video world," he said

Of course what Shammo means is that Verizon won't see the same generous profit margins it's currently seeing if it were to actually give consumers what they want. Verizon saw $8.0 billion in profit on $21.7 billion in second-quarter revenues in large part thanks to shared data plans (though Verizon Wireless' earnings were perfectly healthy under unlimited data plans as well). Since most users don't know what a gigabyte even is, they tend to sign up for bigger plans than they actually need for fear of hitting the overage wall.

Those fears pay huge dividends for the mobile carrier, whose wireless plans are constructed like a giant funnel that constantly pushes users to more and more expensive levels of service once in the door.

Verizon for years has justified some of the highest rates in the industry as reflective of the overall quality of its wireless network. But as competitors like T-Mobile begin to catch up, Verizon's running out of marketing ideas to justify its service's higher price point. Enter last week, when Verizon responded to new unlimited data promotions from Sprint and T-Mobile with new ads proclaiming that the company doesn't sell unlimited data, it sells "limitless data." When asked how you can call a gigabyte-capped shared data plan limitless, Verizon PR trots out its very finest dancing shoes:

"Limitless refers to how you can use your data and unlimited refers to the amount of data,” said Kelly Crummey, director of corporate communications at Verizon...Our competitors claim they offer ‘unlimited plans’ but if you really look at them, they are full of limits on how you use your data with thinks (sic) like SD (not HD) and automatically slowing down your speeds. The way our plans are structured, you can use your data however you want – there are no limits.

Well, no limits except the very clear limits. Apparently, Verizon thinks that you compete by telling customers what they want while abusing the hell out of the dictionary. It should be interesting to see how that tactic plays out as T-Mobile continues to erode Verizon's wireless market share.

from the choose-your-friends dept

It's no secret that lots of internet users hate the idea of metered broadband. It adds serious mental transaction costs in using the internet ("will watching this movie actually cost me lots of money in overage fees?") and generally limits innovation by limiting what you can do online. On top of that, there's little evidence that such metered bandwidth is necessary (contrary to the claims of marketing people, when you talk to the tech people, they don't see any real congestion problems). However, the broadband providers absolutely love the caps because they basically allow them to make more money without having to actually invest in expanding their infrastructure.

So it's interesting to see that Time Warner Cable has set up a site, called Time Warner Cable Conversations, which they claim is a conversation with consumers about how to "fight rising costs." Except... they really only want the conversation to be about rising costs caused by what the TV networks charge to carry the channels. If you want to talk about fighting rising costs by arguing against broadband metering, well, too bad. The whole site is moderated and limited and it appears that only conversations about TV networks and such are allowed. That's not much of a "conversation" now, is it?

from the playing-dirty dept

As you may have heard over the last couple months, AT&T has gone to war with customers who bought its "unlimited" data plans. While the company no longer offers such plans, existing users were grandfathered in. And they like those plans. AT&T, however, would prefer to move them over to tiered plans under which they'll pay more. So it began throttling their connections. If they were using a fair amount of data (really not that much), it slowed their connection down to the point of being basically useless. This is a pure bait-and-switch tactic, where the company sold customers something that it then failed to deliver.

A guy named Matt Spaccarelli felt that this was a clear breach of contract and sued in small claims court... and won $850 ($85 is his monthly fee, and the judge felt that there were 10 months left on the contract that was violated... so, $850). Spaccarelli then also set up a website with all the details, so that others could file their own lawsuits. Apparently, AT&T is none too pleased about this and is playing hardball with the guy, threatening to cut off his phone service after determining that he used the phone to tether.

Separately, they're trying to "settle" with him, but are pissed off that he's been public about the settlement attempts so far, as the key thing in the mind of AT&T lawyers and execs is getting a gag order in place to stop others from going down the same path. Of course, there's no requirement that Spaccarelli settle or agree to any gag order, and it sounds like he's not planning to:

Spaccarelli has posted online the documents he used to argue his case and encourages other AT&T customers copy his suit. Legal settlements usually include non-disclosure agreements that would force Spaccarelli to take down the documents.

In its letter, AT&T asked Spaccarelli to be quiet about the settlement talks, including the fact that it offered to start them, another common stipulation. Spaccarelli said he was not interested in settling, and forwarded the letter to The Associated Press.

from the it's-all-about-the-$$$ dept

Of the four national mobile operators, only Sprint still offers an "unlimited" data plan -- and most industry watchers expect that to go away soon. When the operators talk about this stuff, they complain about how unlimited plans are abused and the amount of data being used by so-called "data hogs" is crippling network bandwidth. Of course, the alternative story is that they just want to charge people higher rates, and putting a toll booth on data usage makes that possible. A new study by Validas confirms that the latter theory seems to match with reality. The company looked at 11,000 mobile phone bills of users on both throttled (tiered) plans and unlimited data plans and found... data usage was effectively the same. In other words, for all the talk about how tiers and throttles are needed to stop bandwidth hogging... reality shows that these plans have little impact on actual data usage. Or, to put it really simply: these plans are all about the mobile operators making more money and have nothing to do with network capacity.

Of course, as I've argued in the past, this is a pretty short-sighted strategy by the mobile operators. While they have every right to set up whatever business models they want in order to maximize profit, this might come back to haunt them. The problem with a tiered or throttled data plan is that it actually makes the mobile data service less valuable. Not only does it cost more for the same usage, it adds mental transaction costs as users have to keep track of their usage. That's only going to make people value alternatives much more. The carriers can get away with that if there are no alternatives (as is the case some of the time), but as more alternatives hit the market, expect people to shift their usage to networks they can actually use without fear.

from the save-that-for-home dept

If you have T-Mobile in the UK you may be disappointed to know that the company has suddenly decided that you should be perfectly happy to use little more than just 500 MB per month -- a paltry amount. It's not quite a cap at 500 MB -- you'll still be able to do some basic surfing, but apparently, once you've used up your 500 MB, you'll no longer be able to do anything beyond browsing static websites or checking email. No streaming, downloading, gaming, etc. Many users previously had caps that were around 3GB, so this is a pretty big drop. Apparently, T-Mobile has decided it gets to tell you what you can and cannot use the account for:

"Browsing means looking at websites and checking email, but not watching videos, downloading files or playing games. We've got a fair use policy but ours means that you'll always be able to browse the internet, it's only when you go over the fair use amount that you won't be able to download, stream and watch video clips."

Basically, this is T-Mobile UK announcing to the world that it doesn't have the bandwidth to actually give people what they want, and it hasn't invested in the necessary upgrades to offer a reasonable service. Or, a simpler way of explaining it, is that this is T-Mobile UK telling users in the UK who actually want to use mobile broadband to find another provider.

from the freedom-to-wear-caps dept

JJ sends over the latest news of our surveillance society gone nutty. It seems that the Austin Public Library in Texas has officially decided to ban baseball caps, sunglasses and hoodies. What does that have to do with surveillance? The Austin American-Statesman has the word:

The library came up with the rule so that customers can't hide their faces, said Toni Grasso, the libraries' administrative manager in the office of programs and partnerships.

"We have security cameras in place, so like banks and courthouses, we're asking people to remove sunglasses and anything that hides the face, for the security of staff and customers," Grasso said.

As someone who (really, not kidding) frequently goes to my local library wearing all three of these "banned" items, I'm hoping this sort of thing doesn't become a trend.

from the that'll-be-good-for-PR dept

So Time Warner Cable has supposedly backed off its metered broadband until it can figure out how to do a better job presenting it (though, it's also threatening to delay upgrades if people don't accept caps or meters). Yet, as reader Matthew Henry alerts us, it appears that Time Warner Cable has instead just started kicking "unlimited" users offline without much warning. Apparently, when the user called to ask what was up, he was told he shouldn't have used so much of his unlimited broadband account. This is the sort of stuff Comcast used to do years ago and which helped contribute to its awful reputation. Nice of Time Warner Cable to try to fix its own reputation by going down the same bad path.

from the there's-usually-a-word-for-this-sort-of-thing dept

Time Warner Cable last week backed off its plans to implement metered broadband plans in several cities, at least until it could figure out how to pitch the plans without attracting so much bad press. But now an interesting post over at GigaOM says that Time Warner is now also rethinking rolling out network upgrades in the cities where it wanted to install the broadband caps. The implication seems to be that the company is saying it's fine if consumers in those places want to complain about the caps, but then they shouldn't expect TWC to upgrade their broadband networks and offer higher speeds. Time Warner and other ISPs like to trot out the line that the cost of providing broadband is surging alongside traffic growth, but it seems that just the opposite is actually happening. So here's some horse-trading for Time Warner: if you don't want to upgrade your networks, or if you want to implement caps, that's fine. But don't expect your customers to hang around.

from the oops dept

Just as the various broadband providers are ramping up their bogus astroturf attempts to convince the world that broadband caps are necessary and good for customers, Saul Hansell has been digging deep into the numbers and can't find any justification at all for the caps. All those stories about overwhelmed networks and exponential traffic growth? Not happening. If anything, the evidence is that the opposite is happening: advances in technology means that it's become cheaper for broadband providers to meet the needs of their customers. And those needs are growing, but that growth rate has been slowing, and is quite manageable. So, basically, the broadband companies are hyping up a problem that just isn't there. There is no crunch. There aren't bandwidth shortages that require cutting off heavy users. The only reason to set up such tiers is to squeeze more money out of customers without providing any improvements in service (actually, while providing less service). And it's all possible thanks to the lack of competition in the marketplace.

from the good-luck-with-that dept

Time Warner has been testing broadband plans with traffic caps for several months, and apparently it likes what it's seen, as it plans to soon expand the caps into four more markets. The company alleges it has to switch to capped plans in order to "support the infrastructure of the broadband business," even though the supposed bandwidth crunch ISPs cite when talking about these plans is little more than a myth. As the company's CEO notes, getting the cat back in the bag by getting consumers to switch from unlimited to capped plans is going to be very difficult. Previous studies have found that even light internet users would look to take their business elsewhere if their ISP introduced caps, mainly because they have absolutely no idea how much bandwidth they're consuming. That's a good thing, because the absence of mental transaction costs helped wired broadband take off, and laid the groundwork for all sorts of innovative internet services -- not to mention lots of revenues for ISPs. Compare this to the mobile world, where per-KB or per-MB pricing helped stymie the growth of data services.